Climate Change Commissioner shares why the ETS alone won’t get us to net zero emissions
Thirteen years later, she is part of the Climate Change Commission team recommending a new path to net zero emissions by 2050.
She says this path includes the ETS but it is clear that while the ETS has a vital role to play, it cannot do it alone.
When conventional markets ignore the climate costs of our choices as producers and consumers, they actively push us in the direction of dangerous climate change.
For example, markets currently tell us that fossil fuels are relatively cheap when in fact they are costing our children and grandchildren a desirable future.
The ETS helps solve this problem by putting a price on greenhouse gas emissions. The emission price used today is not the actual cost to society of those emissions. It operates at a lower level to move us toward our climate targets. It will rise over time as reductions become more difficult – or fall as cost-effective innovation arises or complementary policies drive change.
Following reforms last year, the ETS will now be more effective in helping Aotearoa NZ deliver on our climate targets.
It finally has an emission cap – the foundation of a cap-and-trade system – as well as controls to prevent emission prices from getting disruptively high or low.
However, the commission’s recent advice points to further work needed to strengthen the ETS through appropriate regulatory oversight, changes to free allocations and forestry, and strategic use of ETS revenue in line with a just transition.